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Announcement: What Is a Hard Money Bridge Loan?

March 9th, 2010 Comments Off on Announcement: What Is a Hard Money Bridge Loan? Posted in General

A hard money bridge loan is a kind of hard money loan that is often utilized in commercial or residential real estate transactions to serve as a bridge or a stopgap measure during certain situations and then it is promptly repaid after certain things have happened. The most common situation when this type of loan is used is when a bank loan will take too long to be processed and the borrower has a time limit in completing a transaction. Another possibility is when the borrower wants to save a property from foreclosure and expects his or her financial situation to improve soon and as soon as this occurs, the bridge loan is repaid. A hard money bridge loan is usually provided by a private company, individual or investment pool instead of a bank.

The interest rate for a hard money bridge loan is usually much higher than that offered by banks and the term is usually one year although a certain kind of this loan does not have a specific payoff date. For residential properties the amount of the loan does not usually exceed 80 percent of the property’s value and for commercial properties, the maximum loan-to-value ratio is often 65 percent.

A hard money lender may provide a bridge loan to a developer during that period when the permit is still being processed so that conventional loans are not yet available. After the permit is approved, the developer will be able to get a loan from a bank for lower interest rates and repays the bridge loan. In the case of a residential property, a hardmoney lender may be needed by a homeowner who has to make a down payment on a new home but the money from the sale of the existing home is not yet available. The loan is promptly repaid after the money from the sale of the current home is finally on hand.

A hard money bridge loan may also be used for a business during that period when a senior shareholder wants to leave. A bridge loan is taken based on the value of the real property where the business is located so that the departing partner could be paid until such time that a new major shareholder could be located. Finally, this kind of loan becomes important when the buyer of a property wants to take advantage of a discount that would only be possible if the deal is closed quickly.

Announcement: Benefits Of A Hard Money Loan

March 3rd, 2010 Comments Off on Announcement: Benefits Of A Hard Money Loan Posted in General

This post looks at the benefits of a hard money loan, which is a non-standard type of loan that is provided by private companies or individuals and not by banks and other sources of conventional loans. The hard money lender is willing to take bigger risks that the banks do not want to cover because the loan is not based on the credit rating or score of the borrower but on the value of the collateral, which is usually a real estate property. To compensate for the higher risks undertaken by the lender, higher interest rates and certain fees are charged. Basically, borrowers are interested in a hard money loan either because they are in a hurry to obtain the money or they are incapable of getting a loan from the usual sources.

One of the primary hard money loan benefits for real estate investors or buyers is that it can be obtained during those times when there is not enough time to get a loan from a bank or when it is not yet possible for a bank to provide a loan. In these cases, a hard money bridge loan is often needed. For example, if a homeowner is in the process of buying a new home while selling the old home, he or she may need the loan to pay the down payment for a particular property while the proceeds from the sale of the old home are not yet available.

The benefits of a hard money loan also become obvious when the borrowers are trying to buy time to save their properties from foreclosure. In this case, the hard money loan is used to pay for the outstanding loan to remove the home or property from foreclosure status. What this means is that the borrowers are quite sure that their financial situations will soon improve and that they would be able to repay the loan when the time comes.

A real estate developer may also take advantage of a hard money loan during those times when a bank loan is not yet possible. For example, a conventional loan is not yet permissible when the permits for the project have not yet been approved because the bank could not be sure that the project would push through. The developer gets the non-standard loan to finance the project and after the permits have been approved, he or she gets a conventional loan and repays the former loan.

Announcement: How To Get A Hard Money Loan

February 12th, 2010 10 Comments   Posted in General

This post will provide some guidelines on how to get a hard money loan, which is utilized by architects, land developers and small businesses to buy machinery or real estate property to avoid the need to sell any assets. However, before people should push through with their applications for hard money funding, they should familiarize themselves first with regards to the risks and benefits of a hard money loan. The disadvantage of this type of loan is primarily the high interest rates and other fees that are charged by the private lender and that you might sign up for a rate that would be bigger than you can handle. The advantages of a hard money loan are mostly the speed with which they are provided compared to conventional loans and the fact that they would not depend on the credit score of the borrower.

The first step in looking for this kind of loan is to search for lenders who have already experienced providing them. Banks and other traditional sources of funding do not provide it because of the high risks that are involved. And after you have located the hard money lender who has successfully provided this type of loan, it would be advisable to determine the prevailing money rates. However, the interest rates are not based on the federal rates but on the various loan quotes that have been made.

The next step is to have an expert determine the value of your property because this private money loan would be based on a certain percentage of this value. Make sure that you get the proper documentation that would get the appropriate loan amount. After this, do not forget to ask for the advice of a real estate lawyer and determine the usual prepayment penalties and what would happen in case of default.

Remember to apply and use only one hard money loan at a single time to avoid getting into a situation where your property may be foreclosed. Make sure that the projected cash flows of your real estate project would be capable of paying for the loan. In fact, a certain safety factor should be incorporated in the event that the expected amount of cash flow does not materialize. The final step is to work on the construction contracts, building permits and other documents that would be needed for conventional loans so that you can avoid the high interest rates in the future.

Announcement: What Is a Hard Money Lender?

February 9th, 2010 2 Comments   Posted in General

A hard money lender is usually a private individual who provides a loan to the borrower based on the value of the borrower’s real property. The hard money loan is not dependent on the credit rating or score of the borrower but on a certain percentage of the quick sale value of the collateral. Quick sale value means the amount that the property could be sold by the lender during a time span of one to four months in the event of a default. The common loan-to-value ratio allowed by the lender is from 60 to 70 percent of the quick sale value. Here, it should be noted that if the property will undergo certain changes such as repair, the hard money lender would base the loan on the value of the property after it has been repaired.

The requirements for the hard money financing will vary to a large extent because these will depend on how the hard money lender views the risk presented by the borrower. It will also depend on the attitude of the private investor and the relationship that the borrower has already established. In some cases, the lender may simply inspect the property but in other cases he or she may require the borrower to submit copies of tax returns.

Because private investors or individuals are usually the lenders of this kind of loan, the interest rates and fees that are charged are usually much bigger than those charged by banks and other conventional lenders. So, what are the benefits of a hard money loan? The two most important advantages of this type of loan is that a credit check is not usually conducted because the loan is secured by the collateral and the money is made available to the borrower in much less time than a bank loan.

Meanwhile, because of the high interest rates and fees charged by a hard money lender, they may not be allowed to operate in certain states that have strict usury laws. Nevertheless, the regulation of this particular industry varies widely from state to state. Also, some lenders may be companies that serve a specific regional market or the whole nation. Some are even represented by brokers who usually take a certain percentage of the loan for their services in preparing the documents that are required. Other fees may be added to the interests, such as application fees and prepayment penalties.

Announcement: What is a Hard Money Loan

January 24th, 2010 1 Comment   Posted in General

What is a hard money loan? A hard money loan is provided by a private investor where the collateral used is the borrower’s real property. This is also known as a private money loan because lenders are mostly private individuals who have accumulated a substantial amount of cash and they are willing to take advantage of the opportunity presented by people who require a loan but are unable to get it through the conventional channels, such as banks and finance companies. Borrowers who own real estate usually go for a hard money loan because the lender would not check on their credit rating because the basis for the loan is the market value of the property that is being offered as collateral.

The primary disadvantage of the hard money loan are the very high interest rates and fees that are charged when compared to bank loans. However, borrowers often look for a hard money lender during those times when the money supply from banks and other conventional lenders is tight. The processing time for the loan is also much faster and there are fewer documents to submit. Thus, it can be depended on by real estate investors who are running against time to purchase a particular property before others like them could.

A hard money bridge loan is one type of this loan where the borrower can use it to bridge the gap when a conventional loan is not possible because of time constraints. One example of a time-constrained situation is when the closing date for a mortgage is fast approaching but the bank that is handling the commercial mortgage is still conducting its due diligence. The borrower usually gets the bridge loan rather than lose the deposit that he or she has made.

Another possible situation when a hard money loan could be used by a real estate investor is when he or she wants to convert a particular property to another use. A bank normally would not want to provide the loan until the conversion has been finished and the property is already producing cash flow. Despite the higher interests and fees charged by the lender, the real estate investor would rather use that money than find equity partners. It should be noted, however, that this kind of loan often depends on existing relationships between the borrower and the lender. This is vital for the borrower to ensure that he or she will be getting the best possible terms from the private lender. e lender.

Hard Money Profits

January 7th, 2010 2 Comments   Posted in General

Make hard money loans and you get a high rate of return on your cash. You have to do it properly to be safe, of course. You also need a lot of money to invest to do this.

What are “hard money” loans? They are short-term loans (usually 24 months or less) made to real estate investors, usually so they can purchase and rehab a property. There is often a loan fee of as much as five percent or more of the loan amount, and up to fifteen percent or more annual interest. Why do they want these loans?

Hard money means speed and simplicity. When using hard money lenders, an investor can tell a seller “I can close for cash in a week.” That gets the seller’s attention, especially if he has had offers that have fallen through due to financing contingencies.

Hard Money – How It Works

An investor can usually borrow 65% to 70% of the property value, but not just the current value. As a hard money lender, you’ll loan money based on the ARV, or “after repair value” (as determined by your appraiser). You’ll look at the property, more than credit scores, another reason investors will come to you. Let’s look at an example.

An investor finds a beat-up house that he can buy for $105,000. He has a plan that when complete will bring it up to a market value of $182,000. He figures it will take a month to complete, and two months more to sell it. He comes to you, and you agree that his projections seem reasonable. Your appraiser estimates a $186,000 market value when the project is done.

You agree to loan him 65% of the ARV, which amounts to $120,250. The excess beyond the $105,000 purchase price (about $15,000) goes into an escrow account, to be doled out as the repairs begin. Notice that if this investor keeps his costs down, he might do this whole project without any of his own cash invested.

The 4% loan fee you charge is $4,810, and is added to the loan balance, so the investor owes you a total of $125,060. You are charging him 15% interest, and he can pay just the interest due each month, but the whole balance is due within one year. If it takes longer than that and you have confidence in his plan, you might do another loan after that.

For the sake of our example, we’ll suppose that it takes Two months to finish the house, and two months to sell it. The investor gets $181,000 for it. He paid $105,000, and he made a profit of $31,000 after a total of $45,000 for all of his expenses. he is happy. Now let’s look at what part of those “expenses” went to you.

You had the buyer pay for the appraisal and any other costs of closing the loan, so your total investment was $120,250. This was repaid when the house sold, along with the loan fee of $4,810. You also collected four months of interest on the whole balance of $125,060 (the loan and the fee that was also financed), which totals $6253. Your total profit then was $11,063 on an four-month investment of $120,250. That’s an annual rate of return of 27.6%. How many banks make that on their loans?

Does that seem like a lot for the investor to pay? Well it is, but the interest rate and other fees are irrelevant if they allow you to make a good profit. Remember that he made $31,000 after paying those expenses. In any case it makes sense that hard money lenders get paid well to take risks that banks won’t take. If he screwed up the project, stopped paying, and you had to foreclose, you might be selling a half-finished house for just enough to get your money back.

Suppose you keep most of your money out there in these kinds of loans. Since it isn’t all invested all the time, and is making only 5% in the bank, you average just an 18% return. What does that do to a $200,000 investment portfolio in 12 years? It makes it into 1.6 million dollars. You can see why investors with cash make hard money loans.

Steve Gillman
http://www.articlesbase.com/real-estate-articles/hard-money-profits-140225.html

Hard Money Brokers and Hard Money Lenders

January 5th, 2010 Comments Off on Hard Money Brokers and Hard Money Lenders Posted in General

Hard Money Broker

Hard money loans are made by private lenders and are very different than traditional loans. Hard money lenders can work directly with borrowers or hard money brokers can facilitate loans between borrowers and lenders. Some hard money brokers work in both capacities funding small hard money loans themselves and brokering larger ones. Many people require a hard money loan when buying or investing in real estate, and fortunately California hard money loans are pretty easy to find. There are many California mortgage brokers that can help you find any type of loan you need.

Choosing whether or not to use a hard money broker is the same as deciding to use a regular mortgage broker or approaching individual lenders yourself. There are advantages as well as disadvantages to using a hard money broker and deciding which avenue to take is a decision that you should make carefully.

There is no shortage of California mortgage brokers, and contacting them all directly to find your best deal is a time consuming task. Even finding the best deal on a California hard money loan can take a lot of searching. This is one of the main advantages to using a broker, they do all the leg work for you. A hard money broker may also know of lenders that you may not have considered and may be able to get you financed even if you could not find a lender wiling to take on your loan. A good hard money broker will also be able to assist you in the application process and make sure you have everything you need and that everything in your loan is working to your advantage.

Working directly with a lender has its advantages as well. Not using a broker means that you will probably save money and will not have to worry about paying for a commission for the broker or paying other fees or points. The more people you have involved in the lending process the more you end up paying so dealing directly with a hard money lender will usually allow you to save. The terms of most hard money loans are steep, with high interest rates and other costs so it is important to save where you can. If you want to make sure that you are getting your best deal and do not pay any more that you have to, working directly with a lender is in your best interest. If you need help with the process or cannot find a lender to finance you, a broker may be able to assist you and find you the financing you need.

yanni raz
http://www.articlesbase.com/mortgage-articles/hard-money-brokers-and-hard-money-lenders-710109.html

Hard Money Loans: Cracking the Hard Situations

December 29th, 2009 Comments Off on Hard Money Loans: Cracking the Hard Situations Posted in General

Loans are designed to assist persons financially, and among the varied hard money loans is one. Hard money represents the effort and seriousness of the financial lending institutions to provide a helping hand in the instances of urgent monetary requirements. This particular loan plan can be opted as the last resort.

The Hard Money Loans can be interrupted in different manner, as the cost and exorbitant interest rates are being charged. The purposes that can be served with the help of this amount are such, when an individual intends to sale his/her venture or property with a little bit of renovation and repairment, then hard money loans are best suited. It is tailored for such services, and with the aid of it the borrower can earn a little bit and repay the loan without any stress.

Hard money loans have been providing services under different hallmarks like business loans, residential hard money loans etc. and bagged acclamation from the customers and financial experts. Approval of this loan consumes less time and also lenders in the market provide the loan in an easy way. But to avail the loan, applicants have to pledge property, any residential or commercial, as collateral for the loan. It is only based on the value of the collateral that lenders approve the amount. Having a higher equity, layers the path for the applicants to borrow more amount than mentioned. But bad credit score holders can also apply and borrow the funds to carry out their wants by furnishing the details of credit and personal status. The hard money loans are approved usually against affordable rate of interest.

Unlike the other loans, hard money loans can be approved within less time by filling the online application form. While applying, applicants should always try to avoid mistakes or else the approval process will get delayed. So, all your demands and buying or selling of new property will be made easy with the help of hard money loans.

John Marshall
http://www.articlesbase.com/loans-articles/hard-money-loans-cracking-the-hard-situations-185602.html

Private Lenders and Hard Money Loans

December 22nd, 2009 4 Comments   Posted in General

Private Lenders and Hard Money Loans

Hard money loans are made by private lenders instead of banks or traditional lenders and are for purchasing real estate. Hard money loans are necessary when a buyer wants to purchase or refinance a property but cannot get financing from a bank or traditional lender. Buyers with credit problems, or who do not have the time or meet the requirements to get traditional financing must turn to hard money loans to get the money they need to purchase, invest in, or refinance real estate. There are many California mortgage brokers who can help you to find hard money financing or you can contact hard money lenders yourself.

Hard money loans can be used for a variety of real estate purposes including purchasing property, refinancing a loan, getting cash out for equity, or for business investing when a second mortgage is needed to fund repairs or business investments. In order to get a hard money loan you will need to have sufficient equity in your property. Most private lenders will only lend 65 to 75 percent of a property’s value so you must either have a substantial down payment, be paying much less than the property is worth, or have enough existing equity if you are refinancing.

Getting a hard money loan through a private lender is often the only option for people who have bad credit or other unfavorable situations. Because private lenders are taking on more risk than banks and traditional lenders, they charge higher interest rates and will not originate loans with as high of a loan to value ratio than these other types of lenders. High interest rates will increase payments so hard money loans should only be considered if there are no other options available. Although the terms of these loans are not the most favorable, for people who are trying to buy or invest they can be a way to purchase property and begin building credit.

If you have bad credit, no credit, or other situations that prevent you from getting traditional financing a hard money loan may get you the home or investment you need if you have enough equity or money for a down payment. You can always refinance in the future when your situation is more favorable and reduce your interest rate and payment if you do get a hard money loan, just make sure you know what you are entering into when you borrow from a private lender.

yanni raz
http://www.articlesbase.com/mortgage-articles/private-lenders-and-hard-money-loans-710074.html

What Can a Hard Money Lender Do For You in Today’s Market?

December 15th, 2009 Comments Off on What Can a Hard Money Lender Do For You in Today’s Market? Posted in General

Small and established ventures can utilize a commercial hard money lender when others have turned them down. This is a method of financing which is useful when your business is in need of capital for an upgrade or starting off their venture. Small ventures and great commercial ideas need some financial backing or they may come crashing down after a short period of time. This is why we have the need for commercial hard money lender.
Commercial Hard Money Lenders are ready to invest in small ventures to cover their immediate needs. The hard money lender can vest their interest in the company they lend. Every lender has their own policies and not every lender gives benefits to all the ventures alike. A little bit of guidance is required to choose the best bank which can benefit your business in every way.

Commercial Hard Money Lenders offer various benefits for ventures and some of them are:

• Business financing

• Industry mortgage for real estate

• Commercial credit

• International Trade Finance

• Supplies Financing

• Purchase Finance

• Loan Syndicating

• Energy Lending

Every one is accessible over the web nowadays. It is essential to find a lender which can offer you online facilities which can make your work much easier. This way, you can make your payments easy and you can take control over the transactions of your company.

Mortgages can be applied online 24×7 at your leisure. But, you need to have some kind of identification before applying for such mortgages. Papers about your business are also required on hand for applying.

Commercial hard money lenders can help take your business to the next level provided they take care of your financial requirements. A hard money lender is only a short term solution and they can guide you to where you need to be. Many people opt for small scale money lenders for this particular reason.

The most important thing while going for a mortgage is to read the conditions well and ensure that you are fully aware of each and every condition as there may be some clauses which require you to stay committed to the mortgagor even after the expiry of the deal such as asking you for reports of your company status. It is therefore essential to seek legal advice before signing the agreement.

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